Nov 07, 2012

Nobody cares PTC lost $84 million last quarter

PTC announced their quarterly results last week. No matter how financial news is framed in a press release sent to us, our news service is trained to distill three key items to formulate the headline:

Revenue

Change in revenue

Profit

I'm not a financial analyst, but I hold profit as the most important parameter of a business. It's the bottom line. Checking over the PTC press release, I see the revenue dipped a bit, from $339M to $325M, down 5%... but where is the profit, a.k.a. net income? There is no mention of it in the headline, not in the body. I look all the way down to the tables... and Whoa, baby! PTC lost a whopping $84 million. I can hardly believe it. How can this escape being mentioned? (At least GraphicSpeak noticed.)

I rush to read the transcript of the call, fully expecting the analysts to have flayed PTC management for such a performance. Granted, the executives would not lead with a discussion of the loss; who would want to? But there is no question of it: no where in the whole transcript does the $84M figure come up. Rather, the analyst seem to be a bit upbeat about the company.

I'm thinking PTC has somehow transfixed the audience... maybe served them some Kool Aid. Then, to further my confusion the next day, PTC stock rises.

All my knowledge of finance, or just the basic principles, limited as they are to revenue and profit (which have served me since I had a paper route), all must have been turned on their head. If the analysts (financial whizzes, unlike me) don't have a problem with losing $84M, I have to be doing something wrong.

I must find out why there is no hue and cry over the enormous loss:

Is it because the company still paid a dividend to its investors?

There is a a tax item of $120M that seems to me to have singlehandedly given PTC this huge loss. Was this a one time occurrence, and it is OK to ignore it. Inquiring (non-financial) minds need to know.

Or does it have to do with the $230M PTC paid to acquire Servigistics?

I hope its not, because PTC still has almost $500M in the bank, and they could lose money at this rate for several years before people get worried.

Comments

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Ralph,

Congratulations to you for bringing this up. This lack of transparency from both the public and private CAD/PLM companies is a shame. They come up with press releases about how good everything is but the public companies hide or sugarcoat losses and the private companies never let you know what the basis of their magical year to year improvements is.